Pakistan Customs has recommended the Federal Board of Revenue (FBR) to impose 10 percent import duty on commercial import of silicon steel in order to end misdeclaration. Industry sources told Business Recorder on Wednesday that during the last one year import of silicon steel has witnessed notable increase despite the fact that no new investment has been made in silicon steel consuming sector like electric, transformer and fan industry.
Reportedly, a large quantity of Cold Rolled Coils (CRC) is being imported under the umbrella of silicon steel, as there is zero duty on import of silicon whereas some 10 percent duty on CRC. "Some of the commercial importers are involved in misdeclaration and importing huge quantity of CRC by declaring it silicon steel," they added.
FBR has received a large number of complaints in this regard from domestic steel industry, which is demanding some duty on import of silicon steel in order to end misdeclaration of CRC. Sources said that the federal government has given 10 percent tariff protection to domestic CRC Steel manufacturers, which have invested some 200 million dollar in steel sector during the last few years.
However, some of commercial importers/traders started to import CRC steel declaring its silicon steel to avoid paying 10 percent customs duty which resulted in loss of approximately Rs one billion annually to the national exchequer, besides creating serious difficulties for the domestic CRC industry.
The customs data showed the import of silicon steel jumped by 330 percent to a monthly average of more than 7,600 metric tons during January 2013 to February 2014 up from previous monthly average of 2,300 metric tons during 18 months period from July 2011 till December 2012. In this regard, the CRC Steel manufacturers have held a number of meetings with Ministry of Industries, Engineering Development Board, Federal Board of Revenue and Customs officials and finally Pakistan Customs (Karachi Enforcement) has recommended FBR to impose 10 percent duty on commercial import of silicon steel to stop mis-declaration and enhance revenue collection.
Sources said that customs have recommended duty only on commercial imports in order to ensure availability of cheap raw material to the genuine user/manufacturers. As per the proposal, manufactures will continue to avail the duty exemption. This way the customs' revenue collection would increase by over one billion rupees without affecting the genuine users of Silicon Steel, they informed.
"It is the right time that Ministry of Industries & Production and Engineering Development Board also recommend the same to protect development of steel industry of Pakistan while protecting genuine end users of Silicon Steel by exempting them from duty," they demanded.
It is necessary for the authorities to ensure level playing field for CRC Steel manufacturers as well as stop government's revenue pilferage and increase tax/duty collection, they added. Industry sources said that if the government provide level playing field to domestic steel sector and give confidence to existing companies, they are willing to expand their production capacities, besides bringing new investors in the steel industry.
It is worth mentioning here that Pakistan has one of the lowest per capita annual steel consumptions in the region at 34 kilogram per head compared to 427 kilogram per head in China, 211 kilogram per head in Thailand, 130 kilogram per head in Brazil and 55 kilogram per head in India. It is a well established fact that no country can prosper unless it has its own steel production facilities and sufficient energy generation.
Source:- brecorder.com
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